Spanish dip shows ECB it must act

PRESSURE is mounting on eurozone policymakers to tackle the region’s debt crisis after Spain slid deeper into recession in the second quarter and economic sentiment sank to its lowest level for nearly three years.

Expectations that the European Central Bank (ECB) will shortly launch fresh stimulus measures to stabilise the single currency and ease borrowing cost pressures on Spain and Italy boosted share prices on the continent, while the FTSE 100 index rose 64.4 to 5693.6.

Amid speculation that the ECB may restart its bond-buying programme alongside its latest decision on interest rates on Thursday, the region’s plight was brought into sharper focus by a 0.4 per cent dip in Spanish GDP compared with the previous three months as austerity measures are taking effect.

Meanwhile, a eurozone economic sentiment survey showed the powerhouse German economy being dragged down by the recession in peripheral countries as it posted its sharpest decline in a year.